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Inheritance tax liability when returning to the UK after living abroad for UK Domiciled individuals

This is quite a specialist point, where somebody has been living abroad for many years, then they come and live in the UK, what are the issues around inheritance tax, especially on assets that they hold abroad?

If you are domiciled in the UK, and you are returning after working abroad for a number of years, then all your assets in the UK would be liable for Inheritance tax. In addition, your offshore assets would be liable for Inheritance tax under UK Law, because you have never lost your UK domicile status.

Inheritance tax liability when moving to the UK for UK Non- domiciled individuals

If you are not UK domiciled and you come to the UK, your assets are not liable for inheritance tax. Your UK assets are liable once you have been a UK resident for 15 out of 20 consecutive years.

Once you are deemed domicile, then your worldwide assets in the UK and abroad are all liable for inheritance tax.

How to protect your foreign assets from being taxed for Inheritance Tax in the UK?

If you are not domiciled; then before you come to the UK ( or within the first 15 years of arriving) you should place your offshore assets into an Excluded Property Trust. We are able to assist you with the set-up of this arrangement.

What is an Excluded Property Trust?

An Excluded Property Trust is a trust arrangement, in which you put all your offshore assets and then they are excluded for UK inheritance tax.

The arrangement acts as if the assets never came into the UK, as the assets did not belong to you when you were resident in the UK. Therefore, your offshore assets are excluded from the UK inheritance tax regime.

In addition, if a UK resident is going to be left offshore asset in a Will by a non-domiciled relation setting up an excluded property trust would be tax advantaged for the UK tax resident.